US Fed Policy Meeting Today: Will Jerome Powell Bow To Trump's Pressure For Rate Cuts? What Analysts Say
Experts say while US President Donald Trump pushes for rate cuts, the US Federal Reserve is likely to remain cautious for now.
US Fed Meeting May 2025: The US Federal Reserve will conclude its two-day policy meeting on Wednesday (May 7) and the announcement will be made at 11:30 pm today. The monetary policy review comes amid the tariff war and US President Donald Trump’s pressure to cut rates. According to analysts, Jerome Powell-led Federal Open Market Committee (FOMC) is expected to keep its key short-term interest rate unchanged amid persistent inflationary pressures and political heat from the Trump administration.
Currently, the Fed’s benchmark rate stands at around 4.3 per cent, and most analysts expect no change this time.
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In the previous monetary policy review in March, the US Federal Reserve had kept its key interest rates unchanged at 4.25-4.50 per cent for the second time in a row.
Along with the decision, officials updated their rate cut projections. They see 50 basis points rate cut in 2025.
Mayank Mundhra, vice-president (financial risk management) and head (research) at Abans Financial Services Ltd, said, “As the US Federal Reserve meets today, we expect it to keep interest rates unchanged in the 4.25–4.50 per cent range. April’s strong job growth shows some resilience, but the US economy experienced a 0.3 per cent annualised contraction in Q1 GDP, signalling a slowdown. Inflation stands at 2.6 per cent, still above the Fed’s 2 per cent target, and the risk of stagflation due to escalating trade tensions remains real."
While Trump pushes for rate cuts, the Fed is likely to remain cautious for now. However, with growth losing momentum and inflation gradually cooling, there’s a growing chance that a rate-cutting cycle could begin as early as July. Markets will be tuned into Chair Powell’s tone, as any dovish hint could reinforce expectations of a July rate cut. The Fed may hold rates steady today, but the stage looks set for policy support in the months ahead, he added.
Jigar Trivedi, senior analyst at Reliance Securities, said, “Investors will monitore trade tensions ahead of the highly anticipated FOMC decision scheduled for Tuesday, May 7 at 11:30 PM. While the Fed is widely expected to hold the fund rate steady, markets will be keenly focused on the Fed’s forward guidance and its assessment of ongoing trade-related risks. Trade negotiations between the US and several Asian economies are set to resume this week, though talks with China remain stalled."
The prolonged uncertainty has continued to weigh on investor sentiment, reflected in a slight decline in the U.S. Dollar Index to around 99.6, Trivedi added.
“On the economic data front, the ISM services index reported a sharp expansion in activity, accompanied by rising cost pressures – echoing the strength observed in last week’s robust employment data. Meanwhile, the US trade deficit widened to a record $140.5 billion in March 2025, surpassing expectations of a $137 billion shortfall. Fed officials have acknowledged that sustained tariffs could push inflation higher while also dampening employment. However, the extent and duration of these effects remain uncertain and will likely be a topic of interest in tomorrow’s policy statement and press conference," he added.
Inflation in the US cooled in March, and the Fed’s preferred inflation gauge stands at 3.6 per cent — down from the post-pandemic peak but still well above the Fed’s 2 per cent target.
According to analysts, the September 2025 meeting remains the more likely timeline for a cut but Fed officials have signalled flexibility depending on how inflation, labour markets, and trade dynamics evolve.
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